Regulation CF vs. Regulation A+: The Crowdfunding Rules That Determine Your Access

TL;DR: Two federal exemptions let companies raise money from retail investors without a full SEC registration. Regulation CF caps raises at $5M per year. Regulation A+ goes up to $75M. Knowing which is which determines what deals you can access.

Regulation CF: The $5M Crowdfunding Option

Regulation Crowdfunding arrived in 2016 as the engine behind Title III of the JOBS Act. It did one simple thing: let companies raise up to $1.07M per year from non-accredited retail investors online. In 2021, the SEC increased the cap to $5M. That move changed everything for the crowdfunding ecosystem.

Since then, Reg CF has funded over 8,400 offerings. The market pulled in $1.3B in proceeds. But here's what most investors miss: roughly 60% of those campaigns raised zero dollars. You read that right. Six in ten companies that attempted Reg CF raised nothing at all. That statistic should reshape how you think about this space.

The investor limits matter more than the raise cap. If your annual income and net worth are both below $124,000, you can put in the greater of $2,500 or 5% of your annual income or net worth. If both are at or above $124,000, the limit rises to 10% of the greater amount, capped at $124,000 across all Reg CF offerings in a 12-month period. Accredited investors have no limits anymore. That cap came off in March 2021. This change opened Reg CF to serious institutional and wealthy individual capital.

Here's the catch that keeps me up at night: your Reg CF shares are locked up for 12 months. You cannot sell them. You cannot transfer them. Exceptions exist: to the issuer itself, to accredited investors, to family members, or in certain death-and-divorce scenarios. That lockup is real and it is long. It is not negotiable.

You do get a 48-hour cancellation window before an offering closes. If material terms change, you get five business days to back out. Use that window. Read everything. This is your only escape hatch. Companies must disclose financial information in prescribed formats on Form C, with annual updates filed on Form C-AR. Most investors skip this paperwork. Do not be most investors.

Regulation A+: Tier 1 vs. Tier 2 Differences

Regulation A+ came to the market in June 2015. It is the older sibling to Reg CF. The 2016-2024 period saw 817 offerings raise $9.4B. Tier 1 caps at $20M per year. Tier 2 caps at $75M. The choice between them is strategic and affects the entire offering design.

The difference is not just in the ceiling—it is in the compliance burden. Tier 1 requires state-by-state blue sky registration. That means filing in every single state where you want to raise capital. Different states have different requirements, timelines, and filing fees. Tier 2 is federally preempted under the National Securities Markets Improvement Act. You skip the state filings. You save $50,000 to $100,000 in registration costs, sometimes more.

Tier 2 issuers must provide ongoing financial reporting. Tier 1 does as well, but only in states where they registered. Federal preemption for Tier 2 is the power move. It is why Newsmax raised the full $75M cap in four days in March 2025. It is why Knightscope climbed toward Nasdaq after its Reg A+ offering. When you remove state barriers, capital flows.

The reporting burden itself is heavy. You need quarterly and annual reports. You must disclose material events. You must file on the SEC's EDGAR system. Investors expect transparency. That is not negotiable. Companies that go public via Reg A+ build the disclosure habits they will need if they eventually list on an exchange.

Where the Platforms Fit

Platform selection is itself a regulatory decision. Three platforms dominate Reg CF: Wefunder led with $99M raised in 2024 (33% market share). StartEngine came in second with $86M (24%). Republic rounds out the top three. These platforms vet issuers, host the offering documentation, and handle investor onboarding. They take percentage cuts of successful raises.

Reg A+ is different and far more concentrated. DealMaker Securities quietly captured 51% of all Reg A+ dollars in 2024—$123M of $244M total. Most investors do not know DealMaker exists. It works behind the scenes, providing white-label infrastructure to other platforms. StartEngine also handles Reg A+ offerings and has built significant volume. This consolidation has gone largely unnoticed by the angel community, but it matters for market structure.

Platform	Regulation	2024 Capital Raised	Market Share
Wefunder	Reg CF	$99M	33%
StartEngine	Reg CF & Reg A+	$86M (CF)	24% (CF)
Republic	Reg CF	Data not separately disclosed	Tier 3
DealMaker Securities	Reg A+ (white-label)	$123M	51% (Reg A+)

The Secondary Market Problem

Let's be honest: there is almost no secondary market for Reg CF shares. StartEngine Secondary is the only SEC-registered Alternative Trading System for crowdfunded securities. That is it. One platform. In the entire United States. And its trading volume is minimal.

The 12-month lockup expires and investors expect to sell. Reality is brutal. Liquidity is near zero. Companies do not want to manage hundreds of small shareholders. Shares sit in portfolios gathering dust. This is the hidden cost of crowdfunding, not the regulatory constraints, but the practical absence of an exit.

Meow Wolf is the perfect case study. The immersive art company hit the Reg CF cap in 48 hours on Wefunder in July 2017. Investors owned equity in a company that expanded from New Mexico to Denver, Austin, and Las Vegas. Then in August 2019, Meow Wolf bought back the shares at a fixed price. Investors got their money back plus a modest return. But the upside was capped. Early investors never got to participate in what the company became after that buyback. The founder took control and locked out retail investors.

Reg A+ is different. Those securities can trade on public exchanges. Knightscope went public on Nasdaq in January 2022 at $10 per share. Newsmax opened on the NYSE in March 2025. Investors in those offerings got a real exit path. They could sell into the public market. That is the exception, not the rule.

What the Failure Rate Looks Like

The SEC's Division of Economic and Risk Analysis (DERA) released data in May 2025 that told a harsh story. Of the 9,482 Reg CF campaigns attempted between 2016 and 2024, only 3,869 reported receiving proceeds. Six in ten raised nothing. Think about that for a moment. You cannot invest in two-thirds of these companies because they did not hit their minimum raises.

Of the 7,100-plus issuers that successfully raised funds before Q1 2021, 25.5% were no longer operating as of March 2024. For companies that failed to raise their funding goal, the failure rate hit 40%. For those that hit their target, it was 19%. The difference matters, but both are brutal. Being successful at raising capital is not the same as being successful at surviving long-term.

Only 14 issuers that completed Reg CF offerings have gone public through IPO or merger. That is one in every 250. An average successful Reg CF raise landed around $346,000, far below the $5M cap. Most companies are dramatically undersized relative to the legal maximum.

Then there is fraud. In September 2021, the SEC charged TruCrowd and CEO Vincent Petrescu along with issuers Robert Shumake, Nicole Birch, and Willard Jackson with raising $1.9M through cannabis companies while concealing Shumake's prior criminal conviction. Funds were diverted for personal use. TruCrowd failed to screen for bad actors under its regulatory duties. That was the SEC's first Reg CF enforcement action. The fact that it took five years to bring one case does not mean fraud is rare. It means enforcement is slow.

Success stories exist. Knightscope raised over $120M from 35,000-plus retail investors and went public. Newsmax raised $75M and listed on the NYSE within days. Gumroad hit the $5M Reg CF cap in 12 hours in 2021. But these are outliers. The baseline failure rate is your real data point.

Pending Law Changes

Congress is moving on crowdfunding reform. The ACCESS Act (H.R. 3645) passed the House Financial Services Committee 51-0 on June 10, 2025. It raises the threshold for independent accountant review from $100,000 to $500,000. That cuts compliance costs for small issuers by thousands of dollars, making sub-$500K raises economically viable for founders without deep pockets.

The INVEST Act passed the House 302-123 in December 2025. It expands the accredited investor definition to include anyone who passes an SEC-approved exam. It also raises the VC fund investor cap from 250 to 500. Neither change directly raises the $5M Reg CF ceiling, but both would broaden access and reduce friction in the market.

These are not done deals. The Senate must act. Timing is unclear. But the direction is set: Congress wants to make small equity crowdfunding less expensive to administer. That is good news for issuers. For investors, it means more deal flow in the coming 18 months.

What This Means for Your Portfolio

Regulation CF is for accredited and non-accredited investors who want early-stage exposure and can afford to hold for years. The 60% zero-raise rate means due diligence is non-negotiable. Read the financial statements. Talk to the founder. Understand why this company exists and who is running it.

Regulation A+ is for companies serious about growth capital or an exit. The $75M cap and federal preemption open doors that Reg CF cannot. Knightscope and Newsmax proved the path works. But compliance costs and reporting burdens mean smaller companies usually cannot justify it. You see Reg A+ when founders are thinking about liquidity events.

Platform matters. Wefunder leads Reg CF by volume and community. DealMaker leads Reg A+ by consolidation and infrastructure. StartEngine works across both and has built significant credibility. Know which regulation your deal sits under before you commit capital. Then plan to hold for years unless the company builds enough value to go public or attracts a strategic buyer.

The secondary market is your real risk. If you are betting on StartEngine Secondary to give you an exit in year two or three, you are making a mistake. That ATS is real but illiquid. Assume you are in until the company goes public, gets acquired, or fails. Plan accordingly.

That is the math. That is the reality. Two regulations. Two different paths. Same underlying truth: retail crowdfunding works only for investors who can afford to lose the capital and are patient enough to wait.

Author Disclosure: Jeff Barnes, MBA has no personal position in any company, fund, or platform named in this article. Angel Investors Network has no current commercial relationship with any party mentioned. AIN provides marketing and education services, not investment advice. Past performance does not guarantee future results. All investments involve risk, including loss of principal.